Interest Only Mortgage Calculator

Interest only mortgages allow you to pay only the interest part of your mortgage repayments for an initial period of the mortgage (e.g. 5 or 10 years). Such a mortgage allows a potential home owner to either reduce the level of payment required intitially, or invest more in their property due to lower monthly payment requirements. This can be useful if you are expecting strong returns on the property, however it is important to be careful that you will be able to keep up with payments when you revert to paying both the interest and principal components of the mortgage. You can read more about these mortgages in our article on interest only mortgage loans.

To use the calculator, input the loan amount, its interest rate and the term of the loan. You can also optionally input additional payments required such as real estate taxes, home owners insurance, private mortgage insurance and monthly association dues.

The calculator will then compute the payment that would be required under either an interest only mortgage payment or a payment of both principal and interest. This allows you to compare the reduction in your payment requirements for the two situations.

The decision to enter an interest only mortgage is a serious decision, and the various implications for your future financial situation need to be considered. If the value of your property falls, you could be in a situation where you have more debt than the value of your house. You should always consult a professional financial adviser when considering such an option to ensure you understand all the implications of the loan.